Quantitative Housing: Chinese Govt Buying 25pc of New Homes

To paraphrase: Beijing is now the (covert) marginal buyer of a quarter of all Chinese real estate. That, in itself, is a mind-blowing statistic. What is scarier, is that despite this implicit backstop, property sales are once again declining after 30 months of increases. One can only imagine the epic crash that would ensue if - for some reason - the government bid were to be pulled, and just how spectacular the ensuing global depression would be as the rug is pulled from under the most important asset of the middle class in the world's fastest growing economy.

The bullish take: since the government demolishes existing housing stock, prices can be supported moving forward. In that case, the government is still digging holes and filling them in, but paying for it on credit. Imagine the worst thing possible and then you have a good idea of the bearish scenario.